No price correction likely in Mumbai realty market: HDFC

MUMBAI: Mortgage major HDFC today said a correction is unlikely in the runaway property prices in the metropolis, where the demand continues to be robust.

"I can't see any big drop in prices. The inherent demand for real estate in Mumbai is always going to remain strong," HDFC Vice-Chairman and Chief Executive Keki Mistry told reporters on the sidelines of an industry conference organised by PwC here.

The only factors which can potentially bring down the prices are a dramatic improvement in building by-laws, which will allow more high rises and increase the supply, and a high incidence of job losses, he said.

"Unless you see something like that happening or people are losing jobs and the confidence level is low, I do not see any drop in prices (in Mumbai)."

Asked about reports of excess supply of housing stocks which has increased inventory pile-up with developers, Mistry said, "I don't think there is excess supply. I think there is more demand than can be met."

He said the loan demand remains very robust for the lender, which is second only to State Bank of India in the home loan portfolio.

Asked about a possible rate cut, given the reducing rates environment, Mistry said HDFC will cut rates only if its cost of funds comes down which would be possible only in the scenario of a rate reduction by the RBI.

Mistry refrained from stating his expectations from the mid-quarter credit policy announcement scheduled for December 18, but expected the central bank to cut its key lending rate by 0.50 per cent by March.